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MODEL TAXPAYER CHARTER

By: Euney Marie Mata-Perez on November 15, 2018

Mutual trust and respect between taxpayers and tax authorities, as well as fairness in tax laws, are cornerstones to a successful and effective tax system. Taxation is one of the State’s inherent and great powers. However, when exercising such power, the State should recognize taxpayers’ rights. Taxpayers, on the other hand, have the duty to comply with tax laws and pay their taxes correctly.

While we have the bill of rights enshrined in our constitution, we do not have a focused law setting out taxpayer’s rights and obligations. Some fundamental rights, such as the right to due process, including the right to be properly notified of and dispute assessments and decisions, have been upheld by our courts.

However, because of the desire of countries around the world to raise revenues, coupled with initiatives like the Base Erosion and Profit Shifting Action Plans (BEPS) of the Organisation for Economic Co-operation and Development (OECD) and the G20, more informations are being demanded from taxpayers and being exchanged by and between tax authorities. These initiatives threaten some basic rights, like the right to privacy and confidentiality especially in jurisdictions where data protection laws are not robust.

A few years ago, the Asia-Oceana Tax Consultants’ Association (AOTCA), Confédération Fiscale Européenne (CFE) and Society of Trust and Estate Practitioners (STEP)) undertook a joint project to conduct a world-wide survey of taxpayer rights and responsibilities and craft a Model Taxpayer Charter. The model charter proposed 20 principles which considered the balance of taxpayers’ rights and obligations.

The rights of taxpayers under the Model Taxpayer Charter are as follows:

• Integrity and equality — The tax system shall be designed and administered fairly, honestly and with integrity, according to the law, without bias or preference.

• Certainty — The tax system will be designed and administered to provide as far as possible certainty, clarity and finality in one’s tax affairs.

• Efficiency and effectiveness – The tax system will be designed and administered fairly and cost effectively, taking into account the attainment of its purposes.

• Appeal and the right to dispute resolution – In cases of disputes as to tax liability, an independent, objective, speedy and cost-effective appeal process. Disputes as to actions of the tax authority will be followed up without fear of reprisal under independent oversight.

• Appropriate assistance. – Taxpayers who face difficulties in carrying out their responsibilities as taxpayers will be given appropriate assistance by the tax administration.

• Confidentiality and privacy – A taxpayer’s affairs and records will be kept confidential and private except in the case of public hearings in litigation or criminal prosecutions.

• Pay correct amount of tax – A taxpayer is required to pay no more than the amount of tax based on tax laws.

• Representation – A taxpayer may be represented by a person of the taxpayer’s choosing.

• Proportionality – Enforcement action, including audits, collections, reassessment, penalties and prosecutions, will be proportionate to the circumstances.

• Honesty – In the absence of any evidence to the contrary, to be presumed honest.

• The Model Taxpayer Charter recognizes that taxpayers have the responsibility to:

• Be truthful – Be truthful in all tax matters including legally required disclosures.

• Provide information – Provide information on a timely basis as and when reasonably required.

• Be cooperative – Be cooperative in dealings with the tax administration, filing tax returns and information reporting, the conduct of an audit, and payment of taxes.

• Make payment – Pay tax on time without deduction or offset subject to the right to appeal.

• Comply with the law – Comply with tax responsibilities and seek assistance if necessary.

• Maintain records – Maintain accurate financial records and supporting information for such period as may be reasonably required.

Take due care – Exercise an appropriate degree of care and diligence in taxation matters.

• Retain responsibility – Be held accountable for the correctness and completeness of the information supplied to the tax administration whether or not another person has been engaged to prepare, assemble and/or submit the information on your behalf.

• Show courtesy – Treat tax officers with courtesy and respect, noting that abuse of tax officers in performance of their duties is never acceptable.

A good tax system must have the support of its taxpayers and the tax advisors who assist them. Without this support, voluntary compliance may be hard to achieve. And to get this support, a balance is needed between taxpayer rights and taxpayer responsibilities, as the Model Taxpayer Charter demonstrates.

It our hope that the Philippines will soon pass legislation or regulation adopting the principles behind the Model Taxpayer Charter.

Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. She is the newly-elected President of the Asia-Oceana Tax Consultants’ Association. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.

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